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g i v ing
Every time you give cash or drop off used clothing, books or furniture for charity, you hear “Do you want a
receipt?” Let’s take a look at the real tax benefits of giving.
T E X T BY SA N DY L I N D S E Y
1. Big “If”: Charitable donations are
deductible only if you itemize your
taxes. Those who opt for the Standard
Deduction can donate thousands in cash and
merchandise but not a cent is deductible.
2. Double Check: Itemized
deductions can include donations
plus unreimbursed medical
expenses, various taxes paid and much
more. You may find you want to itemize
3. Tax Bracket: The actual cost of
your donation is balanced by your tax
savings. Simply put: $1,000 donated
by someone in the 33% tax bracket only costs
the donor $670.
Who Qualifies: Most legitimate
charities qualify as tax deductible, but
watch out for foreign charities and
private organizations, some may not. Check
with the IRS or your accountant first.
High Limits: Most people contribute
less than 20% of their adjusted gross
income. For public charities, that
donation can go as high as 50%, but again
check with a professional before cutting a
6. Non-Cash: Old clothes, furniture,
etc., is valued at the current market
value, or in some cases what the
charity actually sells them for (this especially
applies to donated vehicles). Don’t over-
estimate like Bill Clinton did.
Tips courtesy of IRS, TurboTax and H&R Block.
56 Your Costs: Your personal out–of-
pocket expenses could qualify, such
as if you drove around for Meals On
Wheels or performed other errands. Note:
These are calculated as a separate “charitable
Stocks, Etc: Don’t want to pay
capital gains on stocks or bonds?
Donate them and deduct their fair
market value. However, because there are
many caveats and clauses here, run it by your
financial advisor first.
9. Unseen Benefits: Fiscal matters aside,
there’s a lot to be said for activating the
reward center of your brain. It releases a
surge of the positive neurotransmitter dopamine
and we can all use a little more of that!